Pachter Believes Sales Will Stay Flat Until Next-Gen Consoles Arrive

Not counting the Wii U, Wedbush Morgan Securities analyst Michael Pachter believes that the video game retail business will continue to run its course, flatly, until next generation consoles arrive.

If you haven't been keeping track of the NPD lately, the software and hardware sales are starting to decline. The lack of new hardware over the past seven years (with the exception of the Wii U) has seen a lot of drop-off in sales this year, and Pachter believes that the trend won't curb until Microsoft and Sony and unveils their new console.

"A new console cycle is likely to reverse the negative sales trends of the last several years, with next-generation consoles expected from each of the three manufacturers over the next 18 months. Nintendo will launch the Wii U on November 18, and, while neither Sony nor Microsoft has yet announced new hardware, we expect a PS4 no later than November 2013, and a next Xbox no later than March 2014."

There's really no time frame on when Sony's new PlayStation or Microsoft's new Xbox will arrive. Both companies failed to make a showing (or even hint at new consoles) at this year's E3, the biggest tradeshow event of the year.

Just about everyone in the industry expects both hardware manufacturers to rectify the console drought by making announcements at the 2013 E3 tradeshow. By all means, if both Sony and Microsoft forgo that opportunity and decide to ride out another year on the age-old home consoles, then it's pretty much game over, as Nintendo would have two full years of market share all to themselves.

Pachter, however, thinks that innovation and sequelitis isn't so much to blame as it is the mobile and social sector (cover your eyes if you don't want the misinformation to boil the lenses on your viewing balls)...

"Competition from social and mobile games hurt packaged goods sales over the last three years, but should serve to expand the market for console games over the long run, although it appears that the addressable market for handheld games will continue to erode. We expect the publishers to address the "problem" of free online multiplayer with evolving business models, adding increased opportunities to purchase virtual items, creating subscription-only serialized content, and adding premium subscription layers to the free offerings currently provided."

I doubt Xbox Live's monetary subscriptions are going anywhere anytime soon. So long as people are willing to shell out money for what everyone else gets for free, why wouldn't Microsoft just keep on keeping on?

Anyway, September's NPD is expected to be flat, with the only notable exception being Borderlands 2. October will be slightly more interesting with XCOM and Dishonored in tow, and of course, November and December is greed buffet season for all the big corps.